So, you’ve decided to get started investing in real estate. Maybe you heard a real estate “guru” talk about how you can make millions overnight. Maybe you heard that 90% of millionaires made their wealth through real estate. Or, maybe you read my article on the 5 reasons why real estate is the best investment.
No matter what caused you to get started, there are quite a few things to consider before you get started. Here are 5 useful tips to follow when getting started in real estate.
1. Start With the End in Mind
Before you invest in your first property, figure out what your end goal is. Do you want passive income to retire early? Are you trying to leave a legacy? Is your goal to become a millionaire? Whatever your goals are, define them as specifically as you can.
A good example of a specific goal would be to acquire 10 single family homes in the next 5 years that each bring in $500 per month in net income. This would equate to $5,000 per month in income, or $60,000 per year. Once you clearly define your goals, you’ll be able to better evaluate each deal and decide if it helps you get where you want to be.
2. Do Your Research
Make sure to do plenty of research before getting started. Knowledge is power. The better you understand real estate investing, the more likely you are to be successful. Now, this doesn’t mean you have to know everything before you invest. That just isn’t going to happen.
The important thing here is to avoid analysis paralysis. Don’t get too caught up in your research. Many people are so worried that they don’t know enough that they never even get started. Eventually, you have to jump in. One of the best ways to learn is by investing in a property. Even after years in the industry, I still learn new things every day.
3. Start Small
Smart small, please. I can’t stress this enough. I’ve heard of so many people who lose everything on their first investment. This causes them to struggle for years to get back to where they were originally. It also causes them to have a negative perception of investing in real estate. They never want to invest in real estate again.
Starting small allows you to learn the ropes while not risking all of your savings. This way you can learn from your mistakes (you’ll make some, trust me) without being burdened financially. You can then take what you’ve learned and apply it to your next investment.
Don’t get me wrong, some people have been successful by starting big. But I believe this is the exception rather than the rule.
4. Be Patient
Patience is a virtue. This is especially true when it comes to investing in real estate. You know the real estate “guru” who told you how easy it is to become a millionaire overnight? Yeah, he lied to you. Building real wealth takes time. The important thing is to focus on your process. Continue to make steps towards your goals, and the success will come.
It’s also extremely important to be patient when looking for your first deal. A good deal can be hard to find, especially when you first start out. A lot of people start to get impatient, so they invest in a bad deal because they’re tired of waiting. Enthusiasm is great, but make sure it’s the right deal.
5. Don’t Go At it Alone
I highly recommend finding a mentor or partner(s) to help you when you first start investing. If you don’t know of anyone with experience in real estate, there are many other ways to find help. BiggerPockets.com is a great resource to use. I believe anyone involved in real estate, in any capacity, should be a member of this website. You’ll find blogs, articles, videos, and investors of all levels that can help you.
Another method to avoid investing alone is to find a syndication or crowdfunding platform to invest with. A syndication is simply the pooling of money from a group of investors to invest in a project. Crowdfunding is a similar concept, but usually involves more investors and is usually handled online. Getting involved in one of these methods allows you to invest alongside real estate professionals who have a lot of experience in the industry. This is a much safer way to get started and can help you learn the process of investing and everything it involves.